Coalition for New Trade's Beth Baltzan Discusses Rebuilding American Resilience

This week’s episode of The Big 3 welcomes Beth Baltzan, former senior advisor to U.S. Trade Representative Katherine Tai during the Biden Administration and now deputy director of the Coalition for New Trade, for a wide-ranging discussion on how the global trading system broke — and what should replace it. Baltzan argues that the postwar system originally recognized the danger of unchecked capital mobility and sought to empower workers, but that framework unraveled as floating exchange rates, liberalized capital flows, and free-trade orthodoxy took hold.  

The conversation traces how the WTO-era model rewarded capital, weakened labor, and encouraged supply-chain concentration — most visibly through China’s manufacturing dominance and the COVID-era shortages that exposed U.S. vulnerability. Hosts Mihir Torsekar and Andrew Rechenberg highlight how import competition and offshoring suppressed wages, hollowed out industrial communities, and shifted economic gains away from workers.

Baltzan makes the case for a new trade framework built around resilience, labor rights, environmental standards, and corrective action — not reflexive free trade agreements. The episode closes with a discussion of the upcoming USMCA review, rapid-response labor enforcement, digital trade risks, and the need for a bipartisan industrial strategy that rebuilds domestic production while creating a fairer global trading system.


Learn more about the Coalition for New Trade: https://www.coalitionfornewtrade.org/

CHAPTERS:

00:00 - INTRODUCTION
03:24 - BRETTON WOODS, BROKEN PROMISES, & THE RISE OF CAPITAL-FIRST TRADE
19:35 - CHINA SHOCK, SUPPLY FRAGILITY, & THE WORKER COST OF FREE TRADE
44:42 - USMCA REVIEW, LABOR RIGHTS, & THE FIGHT FOR RESILIENT TRADE

Transcript

SPEAKER_00 0:02

This is the Big Three from the Coalition for a Prosperous America, and your hosts Mihir Torsikar and Andrew Rechenberg.

SPEAKER_05 0:15

So it's fair to say that today's global trading system looks very different from the one envisioned in 1944 by John Maynard Keynes at Bretton Woods, New Hampshire. That system was built on the recognition that frictionless capital could destabilize an economy. But if capital flows could be disciplined through capital controls and fixed exchange rates, then governments would have room to lift workers up. And for the first three decades or so, that system held up. But then Milton Freeman won the case for floating exchange rates in the 1970s, and Larry Summers won the case for liberalizing trade flows in the 1990s. The safeguards came down, and capital was unleashed, and workers in the U.S. were left to the market forces. And we've been living with the consequences ever since. US trade deficits are now entrenched, financed by foreign investments that are in assets that do little more than produce asset bubbles that benefit the wealthiest Americans. Here today to help us understand how we got to this point is a special guest, Beth Bolson. Beth Beth served as a senior advisor to uh a U.S. Trade Representative, Catherine Ty, during the Biden administration, and now serves as Deputy Director of the Coalition for New Trade along with former U.S. Trade Representative Catherine Ty. CNT has been publishing some of the sharpest analysis in print this year on what a worker-centered 21st century trade policy could look like, including the coalition's 2026 trade policy agenda and recent reports on how the national trade estimate published by the US Trade Representative has been weaponized. We're grateful to have Beth on the show and look forward to the conversation. But first, welcome to the big three from the Coalition for a Prosperous America, where each week we break down the three biggest stories shaping U.S. trade, industrial policy, and the American economy. I'm Mihir Torsicar, and I'm joined as always by fellow senior economist Andrew Reshenbury. So let's get to it. So first off, Beth, welcome to the show. Um, was there anything that you wanted to elaborate on about anything I said for the Coalition for New Trade before we get started?

SPEAKER_00 2:18

Uh first, let me thank you all for having me on the podcast. I'm really looking forward to it. I'm a lawyer, you're economist. It's really fun for me to be able to talk to economists who are bringing fresh thinking to these conversations. So uh it's much appreciated. Coalition for New Trade comes out of the experience that Ambassador Ty and I had when we were in office, that we felt the old version of globalization had run its course along the lines that you described, Mihir, and that we wanted the opportunity to continue to build out the work we tried to do, some of which, to be frank, was hamstrung by some of our uh our friends in the administration who maybe didn't see things quite the way we did.

SPEAKER_05 3:00

Great. Well, that's uh I think with that, maybe we can get into the first topic on our agenda. So, you know, we heard at the outset about the the the trading system that it was envisioned in the 1940s, and we got to this system now where I think it's fair to say it's it's pretty pretty broken. And I guess it's good to ask, like, how did the system break? So maybe if you could talk take us through that that post-World War trading system, what it was supposed to do, and how we got to this point.

SPEAKER_00 3:26

You you started with Keynes and capital mobility, and we have to remember what was happening in the run-up to uh World War II and the rampant speculation, even under the gold standard at the end of the 19th century, up until World War I, the roaring twenties, uh, the crash, and the recognition that uh this kind of free-flowing capital uh created volatility and instability and had to be disciplined. When Roosevelt got into office in 1933, he was confronted with the threat of fascism on the right and communism on the left. And that motivated him to say, how are we gonna lift up working people so that neither of those things is appealing to them? So, what emerged from this entire conversation was an understanding that you had to have disciplines on capital and you had to empower workers. Now, you're economists, so you will note those are two factors of production. So we always have to track those and what we do with our trade policy. Um then we get to Bretton Woods, where they dealt with the monetary policy first. So the International Monetary Fund was set up in 1944 precisely because they had seen what happened with the collapse of the gold standard, that the competitive currency devaluations and tariffs of the late 30s were actually about the failure of the gold standard and challenges with monetary policy, not smooth holly. Smooth Holly is kind of a scapegoat so that bankers don't have to take responsibility for what they did. So you start with the International Monetary Fund, and only in 1946 do they turn to trade because you needed the monetary system in place before you could get to trade. And then during those trade negotiations, for Roosevelt, his goal had been to internationalize the New Deal. So taking forward that idea of empowering capital and disciplining, uh, sorry, empowering workers and disciplining capital. Uh, and so ultimately what we get is the International Trade Organization Charter in 1948 that has anti-monopoly rules that apply both to private commercial enterprises and public commercial enterprises. You also have labor rules, enforceable labor rules, fair labor standards. That specific formulation was requested by Latin America because Latin Americans had already had some experience with what mobile capital was going to do to their uh the ordinary people in those countries, and they wanted to protect them against mobile capital. So that was the original vision. Then as you describe, we get to uh, you know, Milton Friedman in the 70s, we get to Larry Summers in the 90s, and part of it was the inflation shocks in the 70s and the dollar was overvalued. Uh, there's all of that. But in the 90s, the end of the Cold War ended up being a loss of leverage for working people because that threat of communism in the West had dissipated. And that opened the door for the Larry Summers of the world to come in and say, capital first, trickle down, international economics, that to me, in many ways, seems to have replicated the dynamic under the gold standard, which is empower capital to exploit workers on a global scale.

SPEAKER_05 6:50

Great point. Andrew, you jump in real quick with a if you have any questions. I'll I'll I'll circle back with another question that just uh came to me.

SPEAKER_03 6:58

Yeah, no, I think that I think this does a great job of really outlining the history behind all this, and it all goes back to David Ricardo and the model for England having wool and Portugal having wine, and that this is basically the theoretical model we're basing our entire modern global trade system on. And it's just amazing how outdated that sort of system is. And I think that one thing that we try to point out quite a lot is that it we don't live in that sort of era. We don't live in a sort of area where the geography of where you are determines your comparative advantage, like it does with growing wine in Portugal versus England. We have an era where semiconductors and automobiles and all of these different things are really the your manufacturing advantage can be really created and or exploited. And this is just it's not a kind of natural state that we have in the world. And I think that, yeah, you do a great job of being able to point out a lot of those myths that we have, uh, going back to Smoot Holly and all of these different things. And yeah, my my main question was regarding COVID and when we have this supply chain system where we are really relying on this comparative advantage, does this really see the concentrations in the market that then cause disruptions? Is that something that you saw at uh at the USTR office and especially during COVID or these other times that were directly incentivized to produce in certain countries and incentivized to really concentrate supply there? But when everything goes wrong, what have you seen that actually happens on the ground there?

SPEAKER_00 8:28

Yeah, and this ties into sort of the capital mobility and no protections for workers baked into the system we created with the World Trade Organization. Um, what is comparative advantage? You're exactly right about that. It's not wine and wool. And there's even a question about whether uh Ricardo was wrong when he wrote it, because Portugal had already had some experience with that kind of trade, doesn't seem to have worked out very well for them. But also, you can manufacture, as you said, comparative advantage. And what we've seen with the People's Republic of China is uh they don't have independent labor unions. Ya Chang Huang just published something in Foreign Affairs that says actually the labor share of income for Chinese workers is declining compared to capital. The same dynamic you see in the United States is happening there. Companies don't even know their supply chains. Well, we talked to companies when we were in office, we were we we got to office in the midst of COVID. Understanding we had all of these shortages, there was a massive concentration of production in China. How are we gonna solve for this as a resilience matter? We get companies on the phone, uh we have first-in-class traceability for our supply chains, and you find out they only know the first three tiers and everything else of kind of a word of mouth, informal system until you get to conflict minerals, which they're required to trace because of Dodd-Frank. So there's all this opacity in the system. Ambassador Tai, when she was uh speaking at a conference in 2024, pointed out, and it's public facing, she said, you know, if we take Ricardo to his logical ends, isn't he actually advocating for supply chain concentration? Portugal will make all the wine. England will make all the textile products. How does that work in the light of what we've learned post-COVID and beyond COVID? But COVID was really the wake-up call for normies, I would say.

SPEAKER_03 10:42

Yeah, and I would say that for COVID specifically, I think that it really goes against what the evidence really goes against what a lot of major economists like Jason Ferman would say for, oh, this was all demand-driven and there wasn't really any supply concentration. But when you look at the actual economic data, for example, the New York Fed's global supply chain pressure index was 4.3 standard deviations above its historical average at the end of 2021. And this just shows how much global supply chains are really squeezed by any sort of external event like this happening, like COVID, or we could we could have any number of shocks to the system. And when that happens, this concentrated system becomes very fat fragile very quickly.

SPEAKER_00 11:21

And I'll just add to that point very specifically, I am really trying you're I and I love you guys because you look at the data. I, you know, I'm a lawyer, I talk in sort of like bigger arguments, but uh but what you're saying about Jason Ferman is exactly right. And it's you're asking people not to believe their own experience. People didn't have masks and personal protective equipment. We had frontline workers who died. And I think his response to that is, oh, but we got that back up and running. You know, we were able to well, okay, but who did that? Um, if you read American Flannel, you see what the remaining textile and apparel companies that we have here had to do to be able to step into that reach. And now all the fancy people are saying we don't need textile and apparel production in the United States. What happened during COVID? Why aren't we learning lessons from COVID, especially about the industries that really delivered for us when we were up against it?

SPEAKER_05 12:23

And I was also thinking, too, it occurred to me when we were talking that, you know, you even mentioned that, you know, Latin American countries were actually advocating for workers' rights to be included in, you know, the trade agreements that were happening at the time. And when we think about how we went from 1947, the general agreement on trade and tariffs, where you had something like 23, 24 countries and mostly developed economies trading with each other, um, that's a very different system than what we now have, which is like 169 countries through nine multilateral rounds of negotiation. You know, we get the World Trade Organization, but three-quarters, I think, of which uh the membership now in the WTO is represented by develop less developed economies. And there haven't been any, uh to my knowledge at least, Beth, correct me if I'm wrong, but if there's if there's has there been any kind of worker protection or any kind of acknowledgement for that? I mean, just this week I was testifying at USTR for the forced labor uh you know issue that's on the agenda right now, and that's something that policymakers are talking about. But but how this blind spot was allowed to uh occur, and maybe talk a little bit about that because it's just it's astonishing, because that has essentially created the the world in which capital just goes now to where are the standards the lowest, the environmental standards the lowest, the labor standards the lowest, and we'll just invest there and get the cheapest outputs.

SPEAKER_00 13:39

And the companies will put downward pressure on those things. So it's not just seeking out the lowest level of regulation, it's then pushing the regulations down wherever they can. Gets worse and worse and worse. I should have mentioned that the International Trade Organization charter failed because it couldn't get through the U.S. Congress. Why couldn't it get through the U.S. Congress? People want to say, oh, it was the Cold War isolationists. No, it was the monopolists. They didn't want the anti-monopoly rules, and they sure didn't want the labor rules. What happened over time then is that whole history was forgotten, memory hold. Uh seems to me at the same time that scapegoating smooth holly for everything was being elevated. There's a way to narrative his, but I got a great education, I'm a really fortunate person. I had to learn all this stuff on my own. There's something wrong there, right? So we've forgotten all about the ITO. It doesn't get reflected in the World Trade Organization agreement in 1995, and something really pernicious happens, which is Milton Friedman's disciples, the Chicago boys, especially in Latin America, are able to persuade everyone that their way of doing things, this trickle-down model, is going to work for them as a development model. And the situation we are in today, it's changing. But the situation we're in today, and the situation we're in we've been in for I would say the last 25 years, is that it is emerging economies who oppose labor and environmental standards because they see it as neocolonialist. They feel that the world countries are doing this to hog all of the production and to deprive them of opportunities. And I think that's really tragic. Wanting to have a system in which capital can't exploit people or planet is the opposite of colonialist. But it shows you the success of being exporting this Milton Friedman and then Larry Summers view of the world to all corners of the earth. And then it becomes really difficult to try to unwind it. So specifically on the WTO, when we were in office and we were doing the fisheries subsidies negotiations, I think the idea was to try to treat forced labor, not even ban it, which the United States had proposed in the in the ITO charter in the 40s, nobody took us up on it. That at least you would treat it as a subsidy. You would try to capture in some way, shape, or form that this was a practice we should be disciplining. No luck. Couldn't even succeed on that.

SPEAKER_05 16:25

Yeah. You know, it's interesting. Before we probably pivot to the second topic, I guess the the thought that occurred to me was when we talked about comparative advantage up front. And, you know, you still hear, in spite of all this evidence, you know, to the contrary, about how the system has has failed us, we still hear folks talking about how, no, look, this is this is normal, a normal part of development. We should, you know, comparative advantage, you've got the the countries with the low-cost labor. Uh, they're specializing in what they do, and we're gonna specialize in the high-tech sector. But but when you look at the actual trade data, I mean, China is producing like 35 or 30 percent, something like that, of manufacturing output, but they're consuming like 13%. So, I mean, where does that all that excess production go? It just floods into where else but the United States and other countries who we have now taken up that role of being the consumer of last resort. But it's not just China. I mean, there's other countries who are following a similar sort of um, you know, model that even though we're, you know, a developed economy, there's other developed economies out there as well, but they have much higher manufacturing shares of their economy because they have deliberately produced those kinds of, you know, uh put those policies out there. Um so there's a there's a great global macroeconomic imbalance that's really just kind of uh dysregulating the whole system. And Beth, you mentioned the the returns to capital and and and the disparity of the inequality that's happening in China. I mean, that is a deliberate choice of policy. That is not just a natural state of affairs here, right? Like China's 1.3 cap uh trade surplus is not a natural state of affairs. Um, so I guess that's probably more of a comment, but anything else you wanted to add to that before maybe we pivot to the second topic?

SPEAKER_00 18:03

Just on that, I think, and I I need to go reread an article, this article by by by Huang in Foreign Affairs. I think we also have to be concerned that China seems to be keeping the low end of the value chain and the high end. Yes, there's nothing for anyone else. And there's nothing for anyone else in the United States, but in other countries, we're seeing premature deindustrialization in some of these countries. I was talking to some Brazilians who were saying we're bracing for our own China shock. Now the Europeans are trying to confront the the risk there. I think the Chinese are trying to figure out how to lift up consumption. I think they're trying to figure out how to do that. That we've been talking to Germany about that since the 70s.

SPEAKER_01 18:51

Yes.

SPEAKER_00 18:52

And only now, under real duress, are they starting to try to execute a plan along those lines. So I completely agree with you. And this is a situation that doesn't work for anyone, frankly, except that small slice that is making a lot of money.

SPEAKER_05 19:09

Yeah, they're they're essentially relying on robots really to build out to use the uh the to still main maintain dominance of the lower end of the manufacturing. They're like completely like as they move up the value chain, they're still retaining that low end of it. It's it's crazy.

SPEAKER_00 19:24

Yes.

SPEAKER_03 19:26

Yeah, and I think that brings us really nicely to segment number two. And I think that we're already kind of pivoting in that direction. But the main thing we wanted to talk about for segment number two was where we talked a lot about how the current trade system is broken and all the things that are currently going wrong with it. But we also want to talk about why it's going in this direction, who this trade system is actually benefiting, and largely the inequality that it's causing. For example, since the 1980s and even accelerating a bit in the 2000s, the early 2000s with the first China shock, we've seen that productivity has increased about three times faster than actual worker compensation. So our economy is producing more and more, but workers aren't being paid accordingly for it. And a number of different economists, such as David Otter, has also they have also really highlighted that this import competition with China has suppressed wages in the US, specifically for low-wage working class workers in the US, because they now have to compete with workers from China or from Vietnam and all these other countries. And so I wanted to ask you, Beth, what your experience has been for this question in particular. How has this free trade and import competition with China really impacted inequality here within the US? And how has it really shifted the benefits from trade and the benefits of our economy from a capital share versus a labor share and who's actually benefiting from the system?

SPEAKER_00 20:48

Yeah, you're exactly right. And so, not unlike the system we had under the gold standard, it's a capital-first system. And I've actually had conversations with people who've been doing trade for a long time who say it's normal for them to think that the purpose of a trade agreement is to reward capital. And when you explain that labor is a factor of production, they've never heard it before, they've never thought about it before. It never occurred to them that you would have a system where you are trying to balance two factors of production. And when you tell them that, uh, their their world crumbles a little bit. And so what you'll get is an attack on the data, right? So when the China Shock stuff came out, there's something wrong with the data. When that chart comes out that says wages, average wages are like this, productivity is like this in the United States, people attack the data. They don't, they can't succeed in attacking the trends. So then they want to sort of nitpick around the numbers. But here, yeah, you're agreeing.

SPEAKER_05 21:55

Wholeheartedly. I can't. I'm just trying to jump in on that one because I yeah, I'm I'm Heard from folks who literally say, Well, you know, the China shock, look at the look at the data. They might actually, instead of challenging the data, they might actually say, Look, okay, fine, I'll concede that it caused some problems. But if you look at the effect of the China shock, it was a 10-year period, right? So in about 2015, it ended. So it's like it's all good. And they look at some of the communities that that, you know, what employment changed and how it shifted. Well, they say it was restored from what it was like before the China shock to after. But actually look into the actual data in those communities, and you see that the people who were displaced in those manufacturing sectors, they weren't the ones who found, you know, meaningful employment at matching wages from before. They were people who either succumbed to the diseases of despair, they were the ones who were likely to claim you know welfare, unemployment benefits for a long time. And the employment that they did, you know, manage to get was much lower wages. The people who got those jobs that are buoying that sort of employment rate or restoring it to what it was before are diff much different composition. They're either immigrants or people uh newly educated, you know, in new, new entrants into the workforce. It's a very different system, though. So, you know, the inability to just acknowledge the hurt that was caused, and and it just seems so callous, frankly. I mean, I I it it it blows my mind every time I hear hear some arguments like that.

SPEAKER_00 23:15

I agree with you. And one of the things we did when we were in office that we hope to continue with Coalitions for New Trade, we as a political team managed to visit all 50 states. And we didn't visit to sell them anything, which is usually, you know, oh, I need to get this free trade agreement passed. Let me go visit some people who hate trade. Um, it was to see what's your experience. We went to places Rock Springs, Wyoming, which is not that easy to get to, where they said, we've never had a federal official from DC visit us. And it's the US trade representative's office that's going there and talking to them about what their experience is. And they were really frustrated. They get treated like they don't know anything.

SPEAKER_02 23:58

Yeah.

SPEAKER_00 23:59

So patronizing and obnoxious to our manufacturing workers. And this guy said, look, I know what the labor and environmental standards are in India and China. How are we supposed to compete with that? Right. That is a valid people know. People know that there isn't a level playing field, and that's really valuable. So, what was the narrative? The narrative was, well, the US is going to become a services economy. We're going to have all these fabulous services jobs. And it didn't materialize, which is your point. You got deaths of despair. Those are, you know, McDonald's, where even McDonald's had non-compete, I think. Um Chair Khan, when she was at the FTC, was trying to get rid of that. So where the the loss of worker power happened everywhere. You know, we we globalized it, but there was also a lot going on in the United States that diminished worker power as a domestic matter. And so you do end up in a situation where people have nowhere to turn. And at the same time, you know, the federal government policy on opioids just exacerbates the whole thing. So I will say, from the perspective of my experience in 2015 and 2016, I was working for House Democrats on the Hill. Uh, in 2016, when that blue wall started to crumble, who wasn't surprised? We weren't surprised. We were not surprised. And there were a lot of Midwest Democrats who were not surprised, who had said, this system isn't working. And then trade is aggravating a system that is already problematic.

SPEAKER_03 25:51

Yeah, and I think I'd also point out that it's not always beneficial for the other countries, well, at least the workers in the other countries, because with I think we're especially seeing this now with the labor exploitation investigation that was just announced. And if you really start to dig deeper into this issue, the free trade system is specifically rewarding this sort of worker exploitation in these countries. If you can find the cheapest way to exploit the labor the most, to pay people next to nothing in sweatshops, the current global trade system is rewarding that kind of behavior by shifting production to this absolutely lowest cost production. They don't value labor standards, they don't value the environmental standards, as you've pointed out. And so really the workers in both countries aren't benefiting from this sort of system.

SPEAKER_00 26:34

And if we look at what happened in Wana Plaza in Ivan Bladesh. That's about to be so uh a thousand workers die because the building collapses, it's a garment factory, because the exits were blocked, they couldn't get out, the building was unsafe. I look at the labels of the t-shirts I buy because I don't want to support a system that is exploiting people like that. And that's the dynamic. And what was the response afterwards? When something like that happened in the United States in 1911 with the triangle shirtwaist factory fire, that was a real boost for the labor movement in the United States. We didn't see anything comparable. It was short-lived. Any concern over what happened to the people in Rana Plaza was really, really short-lived. Circling back to the conversations we had domestically, and I remember conversations specifically in Montana, Wyoming, and West Virginia. The conversations we had with folks there, they said we have an extractive economy, and my state, the people of my state, aren't really cut in on the deal. And I said, you know, that's interesting because that's what we hear when we go to Africa, Latin America, you go to these emerging economies, and one of the premises of Coalition of New Trade is that those folks have more in common with each other than they do with the 1% in each of our respective countries.

SPEAKER_04 28:09

That's such a great point. Yeah, really summarizes it well. Go ahead, Andrew.

SPEAKER_03 28:19

Yeah, I think that that can get us over to our third topic of what we need to do about a lot of these things that are going on. What kind of approach can help correct some of these mistakes that we've had with the global trade system, with it's driving a lot of these inequality issues? What can we really do? What kind of approach should we be doing? And so at CPA, we all we often argue for a corrective approach for this sort of system, for looking into a lot of what's happening and finding, especially in the critical sectors that we need, or these gross examples of inequality or wage suppression that we're seeing in the US, what sort of corrections corrective actions can we make in order to shift our trade system in a better direction and making steps in that area. So, Beth, I wanted to turn it over to you to see what sort of policies you're working on, what sort of framework you have in mind at both the USCR and for at the Coalition for New Trade for how we can shift these directions and correct some of these problems.

SPEAKER_00 29:14

I appreciate that question, Andrew. And it's it is hard. The affinity for the ancient regime runs deep and runs broad. So when we were in office coming in with a recognition that there was a real popular resentment for the way we'd pursued trade over the past 30 years, COVID and lessons we were supposed to be learning from COVID. Ambassador Ty and I had both worked at USCR for a long time as career lawyers. We both worked on Capitol Hill during those big trade fights of 2015. And then uh we were reunited at USCR with her at the top of the ticket. We said, so we know we know the trade system. We said, we gotta just stop doing bad things. So that's where you start. You have to just stop making those same mistakes. That was hard to do. People are addicted to free trade agreements, they have no idea what's in them, but they apparently solve problems. So, oh, Taiwan, well, we better do a free trade agreement with Taiwan because that's really gonna help. Who's that gonna help and how? If you look at Taiwanese supply chains, they're deeply integrated with mainland Chinese supply chains. So if you do your traditional free trade agreement, you are just going to reinforce that dynamic. You're actually not solving for our resilience problem. So, first, do no harm. Uh, and that's hard to do. Even people who consider themselves Keynesian domestically are with Milton Friedman when you introduce a border, which is wild. They don't even realize they're doing it. So stop with the free trade agreements and then start to try to figure out what you can do instead. And a lot of the criticism we got was well, if you don't like the old system, you have to have a completely new system to take down off the shelf and replace it. That's not how it works. If we see how we got to Bretton Woods and post-Breton Woods, there were there was a lot of failure along the way and some successes along the way. And you figure out what's working, what didn't work, and you start to build a new system block by block. That's the way we're gonna have to do it. So we put out a supply chain resilient series of policy papers in January of 2025 that starts to lay out how we think we can go about that in a way that's actually going to achieve the goals that we say we're trying to achieve, which is resilience diversification, uh, really correcting for the supply chain concentration that resulted from this obsession with comparative advantage that doesn't hold anymore. So that's that's how we're thinking about it. You should just start and figure out what countries are good at making. I did an interview with a Brazilian climate engineer. Those guys aren't really thinking about what resilient clean supply chains look like. Fantastic. Let's see what you guys do. Let's see how we can plug in and start to build it out in a way that bakes in the labor protections and respects the need to counter environmental arbitrage.

SPEAKER_05 32:41

Yeah, I mean, I think I think one of the things that really holds us back, among other things, but one thing that sticks out in my mind is the lack of of consistency, I think, especially across administrations, but you know, the will to, if if if enough folks are on board with this idea that we do need to introduce some changes and that we do need to uh uh just a whole paradigm shift in how we consider, you know, our global trading system or domestic trading system, how it affects our manufacturing industry, that we need to commit to that at a bare minimum. So you can't just have one administration come in and and implement you know it broad industrial policy, start uh attracting investments, and then the next administration comes in and just dismantles it or chips away at it. It has to be a national, I think, agenda, a national focus, a bipartisan sort of framework. Because in China, they're not worried about you know, shareholders, they're not worried about like they tolerate losses at an unprecedented scale. I mean, we look at the success that they've had with Made in China 2025, their industrial policy that looked across, you know, 10 uh high-tech sectors and they stated that they wanted to be, you know, acquire greater dominance in those sectors, and they achieved a lot of their goals. Uh, but they didn't waste a lot of money. They spent a lot of money to do it, but they were willing to do that. So I think a commitment is so important. And maybe you could talk a little bit about how challenging, I guess, that has been, or or from your experience in the policymaking world, you know, what do you think is is going to, you know, how how likely is it that we can get to that point where we can ensure that kind of, you know, broad-scale kind of national identity, that consensus that this is important, we need to commit to it?

SPEAKER_00 34:12

I love that question. I have a couple of responses, one of which is for people on the right who tend to agree with at least some of what Ambassador Ty and I are putting forward. The thing they really like about the New Deal is the building. That Roosevelt had a plan for building stuff in this country to strengthen our infrastructure, to strengthen our strengthen our manufacturing capacity. So, for all the sort of differences around the New Deal, that's a piece that seems very appealing on a bipartisan basis. So, what can we lift up out of that? There's a lot that Dwight Eisenhower embraced about the New Deal. Can we invoke the war hero Dwight Eisenhower to sort of help lift up those parts of the New Deal that had bipartisan support and see if we can find our way towards something where we don't get in these cycles where the partisanship is so bad that anything the previous administration did, you are obliged to tear down. That's what we've got to try to figure out a way out of. I also wonder if everything that's happening in the Strait of Hormuz right now is going to be a clarifying moment. And ironically, the oil shock of the 70s is what created the pathway for unwinding the good parts of Bretton Woods. Is it another oil shock now that lets us say, okay, um the the importance of having a clean energy sector that is resilient is transpartisan because it goes to things everybody cares about, like affordability, like your ability to make things, your ability to survive. So maybe that's an opportunity for some collaborative work so that we can build out something that people can get behind.

SPEAKER_03 36:31

Yeah, I think this is Yeah, I think this is such an important point, too, of just showing that we can make things in the US. And then I think we mentioned it earlier about this myth that we the US is going to transition to a service economy and it's everything's gonna work out. That that's really not the reality that we need to be living in or that we should be living in. And there are plenty of developed countries. You look at Germany, who has a huge export surplus, they had to really advanced manufacturing and they still support so many middle-class jobs based on that sort of production. And I think that we have also great examples here in the US. You take the the IRA that gave tax credits for solar manufacturing here in the US. This actually shows that we can make things in the US with the right policies. We went from around eight gigawatts of solar module manufacturing in the US before the federal program to about 60 gigawatts in 2025. And that's a that's a six-fold increase of showing that we can bring this manufacturing to the US. This can support good jobs. And I think we really just need to destroy this notion that manufacturing is a thing of the past. It's an ancient industry, we don't need to worry about it. And so no, we this is can be a modern industry that supports good jobs, that has advanced manufacturing. We can use a lot of the automation and robotics that make manufacturing efficient here in the US while supporting those jobs. And so, yeah, I think I think channeling a lot of the good parts of FDR or Eisenhower and showing how we can invest in US production and infrastructure can really be beneficial to show how this can apply to a modern world.

SPEAKER_00 38:02

And I wonder if I could jump in on that because you brought up solar, and it was a real issue in the administration when we were in, which is there were people who felt that climate was such a high priority that we should not care if products were made with forced labor. And that can't be okay. We can't that is just not American, in my view. So we need to address that. We need to recognize the importance of manufacturing. When I see, I was really surprised by some economists who were sympathetic to the flaws of the old system, who then were really kind of trashing the industrial policy that we we were trying to advance because they were assuming it was based on nostalgia. It's not, this is what you're saying, Andrew, it's not based on nostalgia. We visited the textile producers in the Carolinas, as they say, it's not your grandma's, you know, loom or whatever. These are advanced, advanced manufacturing operations. They supply things for national defense. There's a national security component to textile production. And I do think if somebody's a really great and famous economist, please leave your desk and go visit some of these places before you continue to dunk on manufacturing. Now, when you reach the bottom of what they're writing, I think they make a valid point, which is there's a limit to how many manufacturing jobs we are going to create. I think that's a completely valid point, but it gets lost in the first three or four paragraphs that seem like 1990s era anti-manufacturing, we're too good for that, which just alienates a big section of our population.

SPEAKER_05 40:14

Yeah, I think some folks have this very um, I don't know if it's arrogance or what, but this the this this notion that what we're advocating for is just, no, we're just gonna try to employ as many people as we can, give them a shovel and just have them start digging instead of using the most productive tools available. No, we want productive, you know, productive gains for the economy, productive employment, but we're not just simply just trying to the goal isn't to just employ every single person and and put them in, you know, industries where they're not doing anything or contributing. You know, there's there's a way to do this that's that's done in good faith. But you know, it even um it it occurs to me, I I remember hearing once upon a time that there that the Chinese have a the same word for crisis as opportunity. I don't know if that's actually true or not. I think I saw it on The Simpsons or something like that. But it sounds pretty credible, and it's interesting to me that in the crisis that came out of COVID, the supply chain crisis, and and what we should have learned from that, should come the opportunity of recognizing that, you know, of course, industrial policy is is is something we really need to do. And there has been a real cost, uh, supply chain resilience, of course, being a chief among those casualties, of the system that we have uh adopted over the past 30 years. And I think it's time that, you know, the policies that you all were were instrumental in advocating for um that uh was was just part of a part part of the process. And I think we really need to have that larger discussion about, you know, how do we build out this, you know, rebuild some of these uh supply chains that we've we've surrendered, frankly. It's just it's really appalling to see how how we got to this point.

SPEAKER_00 41:43

I wonder if I could add to that two things. One, I think Michael Pettis makes a really powerful argument when he says, if you don't have an industrial policy, you do actually, you just have everybody else's industrial policy. So we are actually experiencing China's industrial policy. To your point, Andrew, earlier, we need to take corrective action. Um, and as we've discussed, you know, what China's doing isn't great for the people of China either, and we should always bear that in mind. Um, the other piece I wanted to add in is other advanced economies and how far behind they are on their thinking on this stuff. And we have to appreciate what a significant obstacle it is. And that was one of the challenges we had in the Biden administration. The United States is actually further ahead in understanding the flaws with the global trading system because we're the consumer of first and last resort, because we bore the brunt of the first China shock, because of the consequences of NAFTA, we're just ahead of the curve. And our politics drove us to be ahead of the curve. Other countries that were able to benefit from export-led growth to the United States have had sort of an umbrella that's protected them from having to confront these consequences. And so I really like my Mr. Carney's speech at Davos, rupture not a transition. He can say it in his beautiful suit at Davos. We said it, nobody listened. Now everybody's listened to him. Fantastic. Great, we'll take it. But what's Canada doing with its trade policy? What's the EU doing with its trade policy? These folks are pursuing the same old neoliberal trade agreements that we're supposed to have ruptured away from. Yeah. That don't have labor protections, enforceable labor protections, they don't have enforceable environmental protections. Nobody believes me when I say this that the United States, on a bipartisan basis, has been more. Progressive on labor and environment and trade than some of our allies who are viewed as more progressive. And the thing I say that upsets them a lot is just try to be as progressive as Paul Ryan when he was chairman of the House Ways and Means Committee. That really upset them because they think of themselves as very progressive. And on their trade policy, they just aren't.

SPEAKER_05 44:27

Yeah, well, actually, one thing you speaking of trade policy and environmental and labor standards, it occurred to me, you know, we've got the USMCA review starting in July. And I think you all have talked about the importance of maybe extending the rapid response mechanism to environmental violations. And maybe if you could talk real quick about that and what you'd like to see um happen in those renegotiations.

SPEAKER_00 44:50

Yeah, you know, the USMCA renegotiation is fascinating. A lot of people still think that July 1 is some kind of cliff, and that if we don't agree to extend, the whole thing unwinds. And that's not true. There's sort of 10 more years of chatter. So I'm not sure how it's gonna play out and all these different issue areas that are on the table. But there are a few things that we're seeing. So there was a rapid response mechanism, which was an innovation in USMCA designed to give greater power to people to trigger an investigation of problematic labor practices at individual facilities. Because the truth is, it's very hard to get one government to sue another government over labor violations. So that turns out to have worked pretty well. Lots of petitions filed, Mexicans very cooperative. A few cases where it went to a panel, I think, but it's also been really good for Mexican workers. And if it's good for Mexican workers, it's good for American workers because they're closing that arbitrage gap. So, but still it wasn't perfect, and there's an opportunity to improve it. So that's on the table. There's a call for something similar. What's the other thing that gets arbitrage environment? So there's a call to do something along those lines. It's a little more complicated for technical reasons. I've got a project going with somebody to see if we can figure out how to do that. So hopefully we can do that. And then there is the category of things I would call uh the product of the extreme corporate capture that we've seen over the last 30 years, where the multinational corporation has had the red carpet into USTR to get USTR to do the things that they want that are good for the bottom line for the corporation, but not necessarily for the American taxpayer or the American worker. And in those, in those areas, it's all the deregulatory stuff that gets baked into these agreements. So it's the good governance chapter, which ends up having lots of ways to obstruct efforts to regulate in the public interest. It's the pharmaceutical stuff that tries to help people extend patents forever and ever and ever and not have generics compete after an appropriate amount of time. It's the digital stuff. That digital chapter is a creature of 2019. And digital is in a completely different place today, especially with the explosion of artificial intelligence. And something that people should really focus on is the question of free data flows. Free data flows is a real risk for repeat on the data side of what we've seen on the manufacturing side, which is all the data could end up in China and it doesn't come back out. It's very, very hard to get people to understand that. They love the sound of free data. But it's really problematic. And again, our allies, who are supposed to be really worried about digital and sort of trying to decouple from us in certain respects, are supporting all this stuff at the World Trade Organization. So we've got work to do. Those are some outlines of USMCA. The other thing we say is can we imagine a truly post-neoliberal trade agreement? Can we truly envision a post-neoliberal world where you're not starting with 34 chapters and trying to improve them here or there? Where you're starting from scratch and you're saying, Canada, what are you good at? Mexico, what are you good at? United States, what are you good at? And we get ourselves off a path where right now our relationship with Canada is how can we get your natural resources? Our relationship with Mexico is great. You can supply low-wage workers, and then the United States will just import everything. I don't think that works well for either of those three parties. Can't we think about a way to harness what's great and move forward with that and liberate ourselves from the shackles of this 34-chapter model?

SPEAKER_05 49:21

Great. Well, I just I guess um it's probably a good place for us to put a pin in this discussion. Uh, but one thing, Beth, before before we go, this has been awesome, by the way. We could probably talk all day, but I wanted to invite you to to offer our guests maybe one thing maybe you want our listeners to take away from this conversation today that that occurs to you.

SPEAKER_00 49:45

For me, and this has been uh a relationship, a coalition for prosperous America that goes back pretty close to a decade now. There's common ground to move forward. We do not have to be stuck in a partisan cycle of doing and undoing whatever the person did before. There is a window for us to build a vision for how we can have a global trading system that works for workers everywhere.

SPEAKER_05 50:18

Fantastic. Well, listen, Beth, thank you so much for joining us. Um I'll just say that the Coalition for New Trade's 2026 trade policy agenda and recent reports on the national trade estimate and the Earth Day Environmental Analysis are all up at their website, the Coalition for New Trade.org, and we'll link them in the show notes. Um learn more about uh our work at prosperousamerica.org, and be sure to find us on YouTube. And you can check us out, uh, check out the big three on Apple, Spotify, Google, or wherever you get your podcast. Uh until we talk again, uh, I'm here torsikar signing off. Thank you again for a great conversation, buddy.